Global Markets Fall Amid Concerns About Fed Independence

By Dow Jones Newswires Staff

U.S. stock futures and international stock markets fell across the board Tuesday after President Trump said he would move to fire Lisa Cook, a Federal Reserve governor, raising further concerns about Fed independence. The dollar steadied after initial losses and longer-dated U.S. Treasury yields rose. Trump's move comes amid his continued criticism of Fed Chair Jerome Powell, who last week opened the door to the prospect of a Fed rate cut next month. Friday's data on July PCE inflation--the Fed's preferred measure--is set to provide further clues for investors about the rate path.

In corporate earnings, the key event is chip bellwether Nvidia's report on Wednesday, with its massive influence on the AI boom likely to provide direction to stocks more broadly. Trump on Monday threatened to increase tariffs and impose export restrictions on countries that tax or regulate U.S. tech firms, adding pressure to global semiconductor stocks.

• U.S. stock futures for the S&P 500 were down 0.2% and futures for the Dow Jones Industrial Average and Nasdaq fell 0.3% early in Europe. The pan-European Stoxx Europe 600 dropped 0.8% in morning trading reflecting broad declines in national markets. Germany's DAX fell 0.8% and France's CAC 40 was the biggest loser, down 1.9%, after premier Francois Bayrou called a confidence vote in his minority government for early next month. Stock markets in Asia all closed down, with Japan's Nikkei 225 index, South Korea's Kospi and Hong Kong's Hang Seng all declining 1%.
• Shares of European semiconductor companies fell following Trump's threat over how countries treat U.S. tech firms. Shares of ASM International fell 0.4%, German chip maker Infineon Technologies fell 1.4% and STMicroelectronics, which supplies Apple and Tesla, was down 0.8%.
• The U.S. dollar steadied after initial losses after Trump on Monday said he was removing Lisa Cook "effective immediately." "This unprecedented move could test the Fed's independence and Cook's removal would allow Trump to reshape the Fed board further, potentially influencing future monetary policy," Danske Bank analysts said. Still, the dollar recovered somewhat as markets are likely anticipating that Cook can win any legal challenge to the move, they said. The DXY dollar index against a basket of currencies was recently flat at 98.445. Earlier, in Asian trading, the dollar had dropped 0.3% to 147.32 against the yen and declined 0.2% to 0.8041 versus the Swiss franc, while the euro edged 0.2% higher.
• U.S. Treasury yields were up for maturities of five years and longer, reflecting potential policy changes and uncertainty over the Fed's future direction. The two-year Treasury yield eased 1.5 basis points to 3.714% but the 10-year yield was up 2.7 basis points to 4.301%, while the 30-year yield rose 4 basis points to 4.929%. The moves were reflected in other markets, with the yield on U.K. 10-year sovereign debt up to a four-month high.
• Gold futures traded sideways, paring earlier gains from increased safe-haven demand. Early in European trade, futures were flat at $3,417.70 a troy ounce, having risen as high as $3434.70/oz in early morning Asian trading. Oil benchmarks were lower within a narrow range.

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